Cabbage or Onion, Which Can I Afford?

Cabbage or Onion, Which Can I Afford?

“All the worlds a negotiation, and all the men and women merely players” (apologies to William Shakespeare As You Like It, Act II Scene VII).

When done correctly, negotiating is like a play in which the parties are still working out the final scene. Each party will have an idea of what the scene will be like; however the scene may never happen so they need to have a fall back plan. In negotiation terms that fallback plan is called the best alternative to a negotiated agreement or BATNA. The term BATNA was originally coined by Roger Fisher and William Ury in their 1981 their book Getting to Yes: Negotiating Without Giving In. Every project manager, Scrum master, product owner, developer and tester is involved in countless negotiations on a daily basis. Those negotiations can be as trivial as were to go to lunch or as momentous as whether a specific feature will be included in a release. One of most common failings of an untrained negotiator is to not identify their BATNA BEFORE they begin negotiations.

Establishing a BATNA provides a negotiator with more negotiating power. Knowing what your alternative is before you start negotiating allows a negotiator to understand what they can concede and where they have to push to attain their goals. Not having a BATNA can lead to a negotiator conceding too much or needlessly digging in their heels.

We have noted that cognitive biases affect how people interpret data. One common bias that affects negotiations is the outcome bias. A person (or group) afflicted with this bias judges a decision by its eventual outcome instead of how they arrive at the decision. The single-minded pursuit of the final outcome of the negotiation, for example a new contract or a new house, leads the party with this type of bias to make the wrong concessions, often leading to buyer’s remorse. Establishing a BATNA before the negotiations begins provides an anchor (another form of bias) that can be used as a flag to indicate when walk away.

BATNA is a very simple concept. BATNA represents what you will do if you fail to get an agreement at the end of a negotiation. Simply put, BATNA is the best you can do when the other party stops negotiate and you can not agree to that position. Without a clear understanding of your BATNA, it is difficult to determine when to accept, draw the line or walk away. For example, once on a family vacation our Subaru Legacy broke down in rural New York State. We found the only person that could work on a Subaru to look at the car. Because they were the only dealer in over a 100 miles we determined that we had two options other than accepting their repair estimate. Our BATNA was either to buy a new car or have our car towed home and take the bus back to Cleveland. Neither were good options. Luckily the dealer’s estimate was VERY reasonable. However we prepared in case we had to negotiate more strenuously or had to walk away.